Markets Hit the Snooze Button This Week
It’s not exactly a blockbuster opening — the market’s opening bell rang with a gentle vibe. Data releases and news flashes came in cooler than a cucumber in a swamp, which left most traders feeling a little under‑the‑weather.
Why the Damp Mood?
- Geopolitical jitters in the Middle East are keeping investors on the fence.
- Everyone’s holding their breath for Nvidia’s earnings that drop on Wednesday.
- Bottom line: it’s a gray, “let’s see how it pans out” kind of start.
Humor‑tuned Take‑away
Think of the market as a shy kitten — it’s barely batting its tail, waiting for the big playtime (those earnings) to get the ball rolling.
Where we stand
Markets Inward‑Looking for a Hint of Calm
The new trading week is looking back at today’s swing, as the dust from the Jackson Hole Symposium still clings to the air. The buzz over Fed Chair Powell’s nod for a September rate cut keeps the market on its toes.
Will it be 25bp or 50bp?
The big question is whether the first cut will be a modest 25 basis points or a larger 50 basis points. The answer will likely come from the August jobs report, due on Sept 6. For now, I’m leaning towards that 25‑point move – a 50‑point cut feels like a panic attack and would only happen if the labor market takes another nosedive.
Equities: Bulls Still in Control
With the green light to cut rates in four weeks, the equity market feels bullish. The S&P 500 is hovering close to a fresh record, and dips are still seen as buying opportunities.
- ~16% of the S&P reached new 52‑week highs on Friday – the best since mid‑July.
- About 80% of the S&P constituents now trade above their 50‑day moving averages – the most since early April.
- Friday saw 434 daily advancing stocks – the highest in two weeks.
These numbers suggest the rally is expanding, and small‑cap stocks might beat the big‑caps in the short run.
Treasuries Shift After Powell’s Comment
The front‑end of the Treasury curve pulled back a bit. The 2‑year moved from a 2% swing below 4% to around 2.5%, dropping to 3.9% as a 2‑year swing. The 10‑year is still stuck around 3.8%.
There’s plenty of supply in the 2‑, 5‑, and 7‑year notes this week, which could shift Treasury traders’ focus away from rates for a moment.
FX: A Peaceful Resurgence
The foreign‑exchange scene is calm. The greenback nudges up from its year‑to‑date low and is inching toward the 101 mark.
The G10 is feeling risk‑averse – the Aussie and Kiwi dollars led declines. The JPY trades in the green against the US dollar – a sign of continuing Middle‑East tension. The euro remains softer after a fourth straight monthly dip in the IFO business climate index.
In the longer term, the USD seems set for a rebound. I still favor the “buying growth” strategy in the G10 universe, and the OIS curve predicts a very aggressive >100bp cut by year‑end, with an even more ambitious >200bp cut next July.
Crude Oil: Middle‑East Drama Powers the Market
The oil market is the biggest mover today. Both front-day Brent and WTI rose 3% each.
The ongoing situation in Libya is still a key factor. Early morning reports washed out production and exports in the eastern part of the country, fueling the jump.
All in all, markets are waiting for the next data cutoff. Stay tuned as the curtain works its way back on the Fed’s agenda and economies shift into gear.
Look ahead
What’s on the Market’s Radar Today?
*No big “shmash” stories are brewing today—just a light‑touch docket.But if you’re tuning in for the European evening, Fed‑watcher Daly gets a big seat at the table.
July Durable Goods Orders: A Mixed Bag
*Tuesday’s Tight Calendar
*These items are the primary risks participants need to keep their eyes peeled for—enough to make the day feel like a “pudding‑smooth” day of market traffic.
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